HTC Looking to Strike Deal, Google and Apple Likely to Drive Up Price of Patent Acquisitions

Tuesday July 26, 2011 8:43 am PDT by Eric Slivka

Bloomberg reports that HTC has expressed willingness to strike a deal with Apple in the patent dispute between the two companies that has seen Apple score an initial victory in front of the U.S. International Trade Commission while HTC has increased its firepower by acquiring a company that had already won a decision against Apple.

“We have to sit down and figure it out,” Winston Yung, chief financial officer of the Taoyuan, Taiwan-based company, said by phone today. “We’re open to having discussions.”

HTC on July 6 announced a $300 million deal to buy S3 Graphics Co., less than a week after that company won an ITC ruling against Apple over two patents. In a July 15 initial determination, the same commission ruled in Apple’s favor on two other patents.

“We are open to all sorts of solutions, as long as the solution and the terms are fair and reasonable,” Yung said. “On and off we’ve had discussions with Apple, even before the initial determination came out.”

Meanwhile, Bloomberg notes in a separate report that the battle between Apple and Google in the patent market is continuing to heat up following Apple's $2.6 billion contribution to a consortium that outbid Google to obtain Nortel's patent portfolio for a total of $4.5 billion. The new report indicates that with Google and Apple both considering bidding for the patent assets of mobile technology firm InterDigital, the eventual sale price for that company may come at a 50% premium over its already-high levels.

InterDigital, whose engineers invented some of the technology for high-speed mobile phone networks now used by the world’s biggest handset makers, has gained $1.4 billion since saying last week it hired banks to explore options including a sale. The $3.2 billion company, based in King of Prussia, Pennsylvania, may cost more than $5 billion, Algorithm Capital and Dougherty & Co. said. That would be the most expensive deal in the wireless equipment industry relative to earnings in more than a decade, according to data compiled by Bloomberg.

InterDigital holds 8,800 patents, about 15% of which are said to be related to mobile phone technologies and some of which have not been licensed, which increases their value. Some analysts have said that those wireless patents may indeed be worth more than Nortel's 4G LTE patents included in the package sold to the Apple consortium.

The market rewards innovation. Apple has seen its sale go through the roof because of it. Patents exist and do protect truly innovative products, but most are highly derivative and makes patent portfolios an offensive weapon against another's products rather than a defensive weapon to protect one's products.

The market rewards innovation -- not the people who innovate. Think of it this way. Who makes more in a company: the person who invents the product or the person who sells it? It doesn't take long to find stories of someone who came up with something innovative without protecting it only to be out-maneuvered and out-spent by another company who essentially got the innovation for free.

What good is it for a company to innovate to have another company profit off of it? Good for the market, bad for the company.

Has Apple sued for anything they haven't implemented? Has Apple attempted to prevent anyone from making "trolley's" (or smartphones)? None of Apple's patents are fundamental to creating a smartphone. You are exaggerating the issues and projecting them on to Apple even though the specifics do no support your claims.

Apple is constantly applying for (and sometimes getting) some pretty simple and obvious patents that can affect everyone's experience, if withheld from other devices.

The latest one about using different numbers of fingers to scroll areas is a good example. The whole point of multitouch is to allow different numbers of fingers to mean different things. For instance, Google uses two fingers to move in 3D in their Maps program. The idea of using two fingers to scroll a subarea would be one obvious solution to anyone with the need.

Another patent they're trying to get includes using two fingers to simulate a knob turn. Give me a break. The reason others don't apply for such patents is because they are so obvious to anyone skilled in the trade.

Non-method, gesture-only patents like the two above should not be granted... especially since the end result will be to make it harder for users to learn a standardized gesture vocabulary.

If not for the ability to lock people out of using an invention for a limited period of time (i.e. what a patent gives you), there would be no incentive to research things to come up with something new - ..

Of course there's incentive; software developers research and invent new interface functionality all the time without a thought to stopping anyone else from doing the same. The reason is, software especially relies on learning from and copying others.

Apple recently won a very broad multitouch patent plus the Nortel stuff.

That "very broad multitouch patent" is not at all what you think. In real life, so far it has only been applied to using two fingers to scroll a subregion on a web page. It wouldn't be a surprise if Motorola adds that to the list of Apple patents they're trying to get overturned.

I don't think anyone here knows much about the Nortel patents. Rumor says they mostly apply to LTE Advanced.

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